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GAMC deal shifts costs to hospitals, health providers

Gov. Tim Pawlenty and DFL legislators have reached a deal over funding for a health insurance program for the poor.

The deal will preserve coverage for most current General Assistance Medical Care recipients, but will shift costs onto medical providers.

GAMC provides health insurance for more than 30,000 of the state's poorest residents. The program was scheduled to end on March 31, after Pawlenty cut its funding last year to balance the state budget.

The new plan will extend GAMC for two months. Starting June 1, a new system, funded with block grants, will replace it.

Instead of paying providers for each service provided, the new plan will provide hospital-based coordinated care systems with capped block grants to provide health care to eligible residents. Most former GAMC recipients will be eligible under the new plan.

"The hope will be this will be a more efficient, comprehensive, and continuous care," Pawlenty said in a press conference this afternoon.

DFL legislators said they're glad to have reached an agreement, but said the plan will hurt medical providers. Sen. Linda Berglin, DFL-Minneapolis, said the plan cuts the program's funding by 77 percent.

"The health care providers are taking a huge cut," said Rep. Thomas Huntley, DFL-Duluth. "That makes the state budget look good, but some hospitals may collapse, and other hospitals may just raise their rates to everybody else to make up for the loss of this money, and that will be put on your insurance bill."

The state's General Fund will provide $71 million in capped block grants to hospital-based Coordinating Care Organizations in the current 2010-2011 budget, and $131 million in 2012-2013.

The plan also establishes a separate method to reimburse CCOs for prescription drug costs. The deal caps drug reimbursements at $45 million from the General Fund in the 2010-2011 fiscal years, and $83 million in the 2012-2013 fiscal years.

GAMC recipient Robert Fischer expressed relief that he won't lose his coverage. Fischer, who is 51, has sleep apnea, depression, and a degenerative back condition. His only income is $203 a month from the state's General Assistance program.

"From what I've heard, I'm very, very happy," Fischer said.

Negotiators have been working on a solution for GAMC for about nine months. The plan was set to expire later this month.

"We knew when we began this endeavor nine months ago that we were going to be putting together legislation that was going to be less than lovely," said Rep. Erin Murphy, DFL-St. Paul. "We were working very hard to protect the safety net for those who get their care in GAMC, and we've protected that commitment."

Murphy added, "I think the safety net is a little thinner. It may be a little bit more like a lifeboat."

The state had planned to transfer many current GAMC enrollees into another state health insurance program, called MinnesotaCare, once the program ended.

But many recipients say they would not be able to afford MinnesotaCare's monthly premiums and higher co-payments.